5 easy ways to increase your retirement savings next week

Planning for retirement can easily become overwhelming, even if you are able to save regularly. Some people choose to postpone it because they don’t know where to start, but that only makes their job more difficult. A better approach is to break the complex task of planning for retirement into simpler steps and tackle them one at a time.

Here are some steps you can take now to improve your retirement preparation within a week or two.

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1. Rethink your budget

Saving more money for retirement can be as easy as remaking your monthly budget. Look at your bank and credit card statements for the past few months and look for areas where you could reduce your spending. It could mean cooking more instead of dining out or canceling an old gym membership you don’t use. Instead, put that extra money into your retirement savings.

2. Go for your 401 (k) match

If your business offers a 401 (k) match, you should do your best to claim the whole thing every year. This is basically a bonus, but you only get it if you put in some money for your retirement. It could be worth hundreds or thousands of dollars today and potentially tens of thousands of dollars or more when you retire.

Speak with your company’s HR department if you’re unsure how their 401 (k) match works. Figure out how much you need to contribute to get the full match and compare that to what you are already contributing. If possible, increase your contributions a bit to enjoy the full game.

3. Open an IRA

Consider opening an IRA if you don’t have access to a 401 (k), if you’ve reached the maximum, or if you don’t think it’s right for you. IRAs have lower contribution limits – just $ 6,000 in 2021, or $ 7,000 for adults 50 and over, compared to $ 19,500 for 401 (k) or $ 26,000 for adults 50 and over. more – but they also offer a wider choice of investment options. Plus, you can choose to pay taxes on your contributions in exchange for tax-free withdrawals later or take tax relief today and pay taxes on your distributions in retirement.

You can open an IRA with any broker and choose from an almost endless variety of stocks, bonds, mutual funds, exchange-traded funds (ETFs) and more. This makes it easier to find investments that match your long-term goals, and it can help you reach your savings goal faster.

4. Ditch expensive investments

All investments have fees, but some are higher than others. You want to keep these costs to a minimum so that you can keep more of your profits. It’s up to you to decide what fees you’re comfortable with, but ideally you would try to pay less than 1% of your assets in fees each year.

Index funds are a great choice for those who are trying to keep costs low while achieving strong returns. These are mutual funds or ETFs that mimic a market index, such as the S&P 500. While these indexes show losses in some years, their average annual returns tend to be quite good over the long term.

5. Automate your contributions

The automation of your pension contributions ensures that you do not forget to make them. It can also help reduce emotional investing decisions, as you won’t have to watch how your investments are doing every time you’re ready to add more money to your account.

If you have a 401 (k), you should be able to carry forward a percentage from each paycheck or a fixed amount to each pay period. Most IRAs allow you to connect to a bank account so that you can automatically transfer funds each month. You are free to change the amount or timing of your contribution at any time, so you can adjust it as your situation evolves.

None of these changes will make you a millionaire overnight, but they can help you establish good financial habits that will make reaching your retirement goals much easier. Once the system is down, continue to contribute regularly and review your retirement plan at least once a year. See if you can identify new opportunities to increase your savings.

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